Why ‘Addressable Audience’ Should Matter to Marketers

The road to making smart media buying decisions starts with knowing your audience. In fact, we’d argue that the foundation of all marketing success starts with having a good grasp on who you’re trying to reach–who they are, what they like and how they spend their time…for starters.

Audience size is a major consideration when evaluating where to place media buys. Yet, interpreting audience metrics can be tricky. Without the right context, numbers can easily be misinterpreted or appear inflated. That’s why it’s so essential for marketers to understand the difference between addressable and non-addressable audiences.

What is an ‘Addressable Audience’?

It sounds more complicated than it is. “Addressable audience” is just the number of users an advertiser can potentially reach with a given campaign. On Pandora, this includes the U.S. listeners who enjoy their personalized music for free (with ads). Listeners who pay for Pandora Plus or Pandora Premium subscriptions would not qualify as “addressable” because they are not exposed to brand messages. Let’s look at an example…

Both Pandora and Spotify have addressable and non-addressable portions of their U.S. audiences. As of June 2016, Spotify claimed to have 100 million active users globally,1 but this isn’t really an accurate reflection of the audience U.S. brands care about because it includes both addressable and non-addressable listeners, inside and outside of the country.

In actuality, Spotify’s total U.S. listener base is 72 million, according to comScore.2 Spotify doesn’t break out the addressable and non-addressable portions of its U.S. audience, but reliable third-party data tells us their ad-supported listeners may amount to 54 million at most.3

The difference between 100 million and 54 million would be significant to any advertiser. So it’s no wonder that misjudgments can happen. This is why it’s well worth it for marketers to do the extra research before committing budget.

Use 3rd-Party Research to Compare Addressable Audience Size

Third-party research is particularly helpful in demonstrating the amount of time users spend with the free, ad-supported versions of Pandora and Spotify.

Let’s look at Millennial (age 18-34) listening behaviors as an example–still one of the most coveted audiences by marketers. According to Edison Research’s latest Share of Ear study (Q4, 2016), addressable U.S. Millennials spend 2.7x more time streaming music on Pandora than on Spotify. If you’re looking for the most engaged audience to reach, start by following addressable audience data.

3 Steps to Ensure You Connect With the Right Audience

The more you know about a publisher’s addressable audience, the smarter decisions you can make about where to spend your media dollars.

1. Examine the numbers: The headline doesn’t always tell the whole story. Dig into the numbers so you can intelligently compare your investment options side-by-side.

3. Get more data: Your Pandora sales representative can provide you with additional addressable data from Edison based on age, gender and ethnicity. Just ask!

Now, let’s look at this in action. SoFi, the popular online personal finance company, was able to successfully connect with the right audience on Pandora by using our sophisticated targeting solutions. We don’t want to give it all away, but their CTR alone was 262% above industry benchmarks! Learn more about their campaign here.